Over the week, the discussion of the debt ceiling has become more of a concern. To start, the debt ceiling is a fixed amount set by Congress on how much outstanding debt the federal government can have. This applies to any debt owed to the public, through U.S. bonds, and debt owed to any trust funds such as for Medicare and Social Security. The current debt limit is set at $16.699 trillion. By raising the debt, the Treasury can borrow the money it needs to pay all their obligations on time. If you’d like to read more about the debt limit, please see: http://money.cnn.com/2013/09/27/news/economy/debt-ceiling-faqs/
The issue outstanding is that an agreement could not be reached as House Republican leaders tried to shift the dispute to raising the government’s borrowing limit. The agreement House Republicans laid out said that they would agree to increase the debt limit if Democrats accepted a few of their requests, such as a one-year delay of the health care law, a tax overhaul and a broad rollback of environmental regulations. President Obama is currently in a tight spot as he publicly announced his disapproval of the requests made.
We can see below that although Congress and the White House cut federal spending since the 2009, they have not reduced any spending in areas that are projected to drive future debt, such as Medicare and Medicaid.
The Treasury, on Wednesday, September 25th, set a deadline for when cash may run out: October 17. By that day, Congress will have $30 billion cash on hand leading to an unprecedented default by the United States.
The effect of a possible government shutdown has caused the stock market to retreat on Wednesday. Standard & Poor’s 500-stock index posted its 5th day of losses. The Dow Industrials lose 61.33 pointes, or 0.40%. The S&P 500 fell 4.65 points, or 0.27%. The Nasdaq Composite Index dropped 7.16 pointes, or 0.19%.
Although a deadline for when cash will run out is set on October 17, the government will face a possible shutdown on Tuesday, that may leave over millions of federal workers working without a paycheck. The House Republicans voted to attach a one-year delay of President Obama’s health care law and a repeal of a tax to pay for it to legislation, in order to keep the government running, just a few minutes passed midnight into Sunday.
The House of Republicans are still working on a bill to raise the debt ceiling, borrowing limit. President Obama has also assured that any legislation that will seek to “delay or defund his signature domestic achievement” will be vetoed.